Wockhardt Chairman Habil Khorakiwala has assured employees that the company's liquidity problems will ease in the 'coming weeks and months' as the company undergoes debt restructuring.
In a letter to all employees on April 1, a day after the company announced corporate debt restructuring to manage over Rs 3,400 crore (Rs 34 billion) of debts and his stepping down as chairman, Khorakiwala indicated the company wasn't looking to sell its core businesses.
In the letter to all 6,000 employees across the globe, he said the company would divest some non-core businesses. He said the mounting debts were due to losses from mark-to-market forex issues, liquidity issues, banks tightening lending norms and the global recession.
'CDR will allow us non-payment of loan for some time, creating huge flexibilities in creating our own liquidity. The name of this game is how we manage our cash flows and working capital efficiently,' he said.
He said CDR would ensure better inventory and cost management practices and in achieving normalcy in cash flows. 'This is like insulating ourselves like a typical insurer plan, keeping in mind the current conditions,' he added.
The letter says 2008 was a roller-coaster ride with better revenues and profits on the one hand and mounting debts and liquidity issues on the other.
'On a broader front, you may be wondering why the liquidity issue, while our performance was good,' he said.
Sources said Khorakiwala had on March 31 convened a meeting of various departmental heads to explain the issues plaguing Wockhardt. Besides, he sent an internal circular on his intention to divest a minority stake in Wockhardt Hospitals.
Khorakiwala said the media had been relying on 'hearsay' in the market and those were 'doctored rumours and incorrect information.'
'In the meantime, I urge you remain focused, believe in yourself and in your company as a true Wockhardt employee,' Khorakiwala told the employees.
